Of course, retirement savers have not been immune to the general decline in risk tolerance, a fact that my presentation addresses.

However, two key innovations in 401(k) plans have helped keep many Americans on course toward their retirement goals. First, automatic enrollment has spread rapidly, creating millions of new retirement savers. And use of target date funds has also grown, particularly as default investment options for those auto-enrolled workers.

As the following chart shows, 401(k) participants in most age groups have reduced the extremes in their asset allocations. Look in particular at the top portion of each bar, the blue. This shows the share of savers who have allocated 80 percent or more of their accounts to stocks. With the exception of the very youngest workers, fewer workers at any given age are in this extreme group in 2009 than were in 2000. Retirement savers have tended to temper their allocations to stocks.

But they haven’t gone overboard, and we can credit the features of 401(k)s and the growth of target date funds for that. Consider the following chart on workers who were in their 30s and on their current job less than two years at the time of each survey. As you can see from the top segment of each bar, recently hired 30-somethings have steadily increased their investments in balanced investments, from 8 percent of their total assets for the recent hires in 1998 to 34 percent among the recent hires in 2009. The growing role of target date funds—which accounted for one-quarter of this group’s 401(k) plan assets in 2009—is fuelling that trend.

Recently Hired Participants in Their Thirties Hold More Target Date and Balanced Assets

401(k) plan average asset allocation among 401(k) participants with two or fewer years of tenure, percent of total